Witnesses at a Dec. 11 US House Energy and Commerce subcommittee hearing generally applauded the sponsors’ effort in releasing a discussion draft weeks earlier that would reform the Renewable Fuel Standard’s quotas by establishing a national octane specification beginning in 2023 (OGJ Online, Nov. 21, 2018).
Then the 11 witnesses, including seven from biofuel organizations, each explained why they thought the proposal should be changed.
“Rather than looking at individual federal transportation fuel policies on their own, the draft 21st Century Transportation Fuels Act takes a wider view of those policies and considers how they might work together to bring more value to consumers and more certainty to stakeholders,” said Environment Subcommittee Chairman John Shimkus (R-Ill.), who developed the discussion draft with Rep. Bill Flores (D-Tex.).
It’s time for a comprehensive reform, Shimkus argued. “Stakeholders on all sides of this debate have been whipsawed for months by rumored and actual administrative actions, and that uncertainty will only increase after 2022 when EPA receives even broader discretion to set biofuel blending requirements,” Shimkus said.
“In fact, given [US Energy Information Administration] projections of declining liquid transportation fuel demand, it’s difficult to envision a post-2022 scenario in which biofuel volumes would not actually be lower than they are today,” Shimkus said.
Advanced biofuel phaseout
The biofuels groups appeared most displeased with the discussion draft’s provision that would phase out the RFS’s advanced biofuel component at the end of 2023. “We cannot support legislation that would ultimately turn back the clock on our nation’s commitment to renewable biofuels, completely undermining the benefits that consumers have come to expect from ethanol at the pump,” said Emily Skor, chief executive of Washington-based Growth Energy, which represents 100 producer plants and 89 associate ethanol supply chain companies.
But American Fuel & Petrochemical Manufacturers Association Pres. Chet Thompson maintained that the RFS should go away once the proposed 95 research octane number standard takes effect. “Ethanol is a cost-competitive source of octane and could reduce the investments needed in the refining system, but to drive down cost a 95 RON octane standard must enable competition instead of mandating specific fuels,” he said.
Thompson also urged Congress to:
• Refrain from establishing new product-specific mandates or subsidies.
• Preempt state laws which would conflict with a nationwide fuel-neutral octane standard,
• Provide liability protection for refiners and retailers who comply with misfuelling regulations.
• Authorize and fund a robust consumer education campaign as new vehicles enter the market.
• Require the US Environmental Protection Agency and Federal Trade Commission to establish misfuelling labeling regulations to prevent inadvertent use of sub-octane fuel in new vehicles.
R. Timothy Columbus, a senior counsel at Steptoe & Johnson LLP who testified on behalf of the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America, said that the organizations have taken no position on the discussion draft overall.
“The bill text, however, must clarify that a retailer who complies with all applicable signage and other misfuelling prevention requirements is protected from liability under state, federal, and common law with regard to damages resulting from any misfuelling activity of a consumer,” Columbus said. “This protection is necessary to ensure that retailers who comply with all necessary labeling requirements are not susceptible to penalties for behavior over which they have no control.”
Steve Zimmer, executive director at the US Council for Automotive Research LLC in Southfield, Mich., called the discussion draft “the only viable near-term pathway for implementation of a 95 RON minimum and the benefits it can deliver.” But he questioned whether its provision allowing would gasoline with alcohol blends up to 20% would be appropriate, since the current domestic vehicle fleet is designed to run on fuels with a 10% or 15% blend.
“Any proposed new fuel blend should allow automakers appropriate lead time, collaborating with all stakeholders to ensure the fuel blend and vehicles are introduced at the same time,” Zimmer said. “Automakers document the specific ethanol capability limit in the owners’ manual for each vehicle and, with the exception of flex-fuel vehicles, today only five vehicle models sold in the US warrant ethanol content above 15%.”
David Fialkov, government relations vice-president at the National Association of Truck Stop Operators, focused his testimony on the diesel fuel market and the opportunities for policymakers to provide incentives for retailers to incorporate more advanced biofuels into the nation’s diesel supply.
“The RFS created market incentives that have led many of NATSO’s most successful members to incorporate biodiesel into their diesel fuel supply. In this respect, the RFS has been an extraordinary success: Biomass-based diesel production is more than three times what was originally anticipated and can continue to be the largest source of high GHG-reduction fuels in the coming years,” Fialkov said.
Throughout its history, however, the RFS has been undermined in several ways, particularly in its process for setting annual renewable fuel quotas that can be difficult to predict, and in executive branch decisions as it implements the program, Fialkov said. He said the discussion draft would resolve some of these issues but could be improved “to provide further market certainty and protection against counterproductive executive branch implementation decisions.”
Contact Nick Snow at [email protected].
